In this chapter, we analyze various forms of network effects. As a network effect is an external effect, it is important to identify the economic agent who generates it (the “originator”) and the one who is affected (the “receiver”). If originator and receiver are seen to belong to a common group of agents, one talks of a “within- group” network effect; otherwise, if they are seen to belong to different groups, one talks of a “cross-group” network effect. In both cases, it is also crucial to determine whether network effects are positive or negative. Crossing the two dimensions (within- vs. cross-group and positive vs. negative), we obtain a number of typical situations, which we describe in Sections 1.1 and 1.2. We then confront these typical situations to the reality and, on this basis, we propose a definition of platforms and ways to categorize them in Section 1.3.

This chapter begins with a real-life example that sets the scene for the core question engaged in this book: what is the substantive content of the obligations corporations have in relation to fundamental rights? The goal of the book is to develop a general legal analytical framework to answer this question at an intermediate level of determinacy that can guide decision-making in concrete cases. It also considers the institutional changes required to give effect to the framework and render it meaningful. In so doing, it highlights the union of substance, process and institutional design. The chapter outlines the methodological approach I adopt: it combines international and constitutional law; straddles the boundary between public and private law; engages insights from disciplines such as philosophy, economics and political science; and combines the normative and descriptive. The chapter also provides an outline of the structure of the argument in this book and brief description of what is accomplished in each chapter.

In this chapter, we seek to understand key economic consequences of network effects. First, in Section 3.1, we analyze the impacts that network effects have on the demand for participation on a platform. The main lesson we draw is that the interdependence between individual demands leads to unconventional aggregate demands; in particular, we show that a given price for accessing the platform may be compatible with several levels of participation. Next, in Section 3.2, we explore the pricing of access to a platform, which is made complex by the presence of network effects. Finally, in Section 3.3, we discuss other strategic decisions that platforms need to combine with pricing to manage network effects; in particular, a platform has to decide the extent to which its services are compatible with alternative services.

The analysis in the last chapters reveals a convergence across the various models and jurisdictions considered in addressing the ‘substantive content’ of the obligations of non-state actors. This chapter attempts to describe and systematise what emerges from these judgments into an analytical framework which I term the ‘multi-factoral approach’. An optimal articulation of this approach, I argue, requires a series of steps, three of which I seek to accomplish in this chapter: namely, identifying the various factors at play in a situation; examining their normative grounding and understanding their relevance to the imposition of corporate obligations; and, developing presumptive principles, that help us understand their implications for corporate obligations. I identify and explore the relevance and weight to be accorded to three beneficiary-orientated factors (interests, vulnerability and impact) as well as three agent-relative factors (capacity, function and autonomy). This chapter also shows that none of these factors is alone sufficient to determine corporate obligations.

In this epilogue, we give a preview of the topics that we will develop in our next book on platform competition and platform regulation; we also summarize what this book has already taught us about these topics.

In this chapter, we take a closer look at how the strategies of a profit-maximizing two-sided platform affect user participation and usage in a buyer-seller context. First, in Section 6.1, we introduce competition between sellers on the platform and analyze how this affects platform pricing and design; we also assess the impacts of the platform’s decisions on product variety. Next, in Section 6.2, we examine two specific design decisions that affect cross-group network effects: First, we revisit the issue of product variety, which a platform can also manage through its design of rating, reviews, and recommender systems; second, we examine the extent to which an intermediary wants to increase price transparency on the platform. Finally, in Section 6.3, we turn to design decisions that a platform can use to govern the sellers’ pricing strategies; the question here is whether platforms can increase their profit by letting sellers choose from a richer set of pricing strategies – for instance, by providing sellers with buyers’ personal data so as to facilitate differential pricing.

In this chapter, we consider the strategies that platforms can use first to launch their operations and, later, to expand them. In Section 4.1, we explore the economic trade-offs for a firm of choosing a (two- sided) platform model rather than alternative modes of organization. For firms adopting the two-sided platform model, we then expose the difficulties that they will inevitably face when trying to bring two groups of agents together: we formalize, in Section 4.2, what is known as the “chicken-and- egg problem” and show how an adequate choice of strategies may solve it. In Section 4.3, we discuss the strategies that platforms can implement to increase the level of trust among users, thereby securing their participation and, possibly, intensifying the network effects. Finally, in Section 4.4, we examine why and how a platform may decide to expand the range of services that it offers.

This chapter is concerned with understanding the limited liability corporation, the dominant form of conducting business today. First, I consider the relationship between the corporation and the individuals underlying it and argue that this is best captured by a ‘supervenience relation’: the corporation is not reducible to but dependent upon the individuals underlying it. Secondly, I consider the very purpose of forming a corporate entity and argue for a ‘socio-liberal conception of the corporation’. This view understands the corporation as a structure designed to harness the expression of individual economic interests for social benefits. Both the wider social purpose and individual profit-seeking motives are necessary to understand the complex duality that is the modern corporation. These reflections on the nature and purpose of the corporate form – as will be seen later in this book - are of vital importance to explicating the obligations such entities have that flow from fundamental rights.

This chapter considers the institutional implications of the multi-factoral model in national law. Given its involving an ineliminable need for judgment, this chapter argues for an approach to law reform that focuses on enhancing the quality of decision-making within the corporation surrounding its fundamental rights obligations. Doing so, I argue requires focusing much attention on reforms to corporate law that can help ‘constitutionalise’ fundamental rights within the basic legal structure of the corporation itself. I propose a series of law reforms that include expanding the diversity of the directors; developing a new fiduciary duty specifically relating to fundamental rights; enhancing disclosure requirements; developing a new enforcement action allowing directors to be sued in their personal capacity for rights violations; creating regulatory fines and financial penalties for rights violations; implementing an enhanced framework for shareholder obligations; rejecting the business judgment rule where fundamental rights are involved; and the utilisation of dialogical remedies by courts.

This chapter considers the ‘state duty to protect’ model developed at the international level which imposes obligations on the state to protect individuals against harms to their fundamental rights by non-state actors. The model attempts to preserve the state-centric nature of international law but, I argue, is not consonant with the legal normative foundations of fundamental rights which are agnostic as to the agents who must realise them. In particular, I show that the model requires understanding what the state must protect individuals against which, in turn, requires determining what the legally enforceable obligations of non-state actors are. Through examining cases of the European Court of Human Rights, I analyse how the Court in fact reasons about the substantive content of such obligations. I show how it lacks a clear analytical framework but references several normative factors and utilises a balancing process which provide the seeds for the multi-factoral approach developed later in the book.